Editor’s note: Regardless of who wins this year’s NBA Championship, this year’s winner will be a franchise that has won it all before. Since the 1979-80 NBA season — a span of 33 years — only 9 NBA franchises have won a title. In honour of this amazing lack of competitive balance, Dre has written a post on one our favourite myths: the idea that the NBA needs “parity” in order to be successful.

It occurs to me that one of the most prevalent thoughts in sports goes like this:

We need a fair league where any team has a shot of winning! If the same teams just keep winning over and over, no one will watch!

But this myth is not backed by data. The NBA reached its highest levels of popularity when it was the least fair; when the Lakers, Celtics, and Bulls were winning all the titles. And this is also true of other industries; in the tech field we’ve seen companies like Microsoft, Google, and Apple gain utter dominance and remain successful for years. We’ve also seen this in other entertainment fields: even as the Star Wars movies continued (with declining quality) they all made hundreds of millions of dollars. In fact, Hollywood is littered with sequels that keep recycling the same plots, and people keep paying to see them. So why is there this myth that it’s bad if the same couple of teams keep winning? The answer is almost a century old and comes from Dave Berri and Martin Schmidt in Stumbling on Wins:

In 1935, the Brooklyn Dodgers (yes, there was an NFL team with this name) and [Bert] Bell’s Philadelphia Eagles both desired the services of a star fullback with the Minnesota Golden Gophers named Stanislaus (“Stockyard Stan”) Kostka. At this time there was no college football draft. Consequently, a bidding war for Kostka ensued between the Dodgers and Eagles. When the war ended, Kostka signed a $5,000 contract with the Dodgers.
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The owner of the Eagles [Bell] argued that NFL teams should no longer compete for the services of college talent. For Bell, a better system would be a reverse-order draft, where the worst teams from the previous season get to select the best college talent. Upon being drafted, the players would only be allowed to negotiate a contract with the team that held his rights.
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Instituting the NFL draft clearly benefitted Bell. Bell’s Eagles were the worst team in 1935; and when the draft was instituted in 1936, Bell got to choose first.

Now, notice what we have. An owner wants a player and “loses” the negotiation. As a result, the owner rallies to change the rules such that the same scenario can’t happen again. In Bell’s case, the rule change also benefitted him immediately the following season! Of course, simply saying “I’m a sore loser!” wouldn’t be a compelling argument. So Bell gave the very same argument we see today. Poorer teams (in his case both money wise and performance wise) can’t compete with richer better teams. If this happens, the league will fall apart! We have to do something! Won’t somebody think of the children?!

And it turns out that this scenario is not uncommon, even just in the history of the NBA. Here are a few fun examples:

In its early days the NBA had a territorial pick. A team could choose to select a player that played college ball within 50 miles of their team instead of using their first round pick (and of course the closer team beat out other teams that may have wanted to draft the player). The logic was that the local fan base would already know the player and it would improve league popularity. Of course, the very first draft with this rule has Ed Macauley, reigning AP player of the year, and All-American Vern Mikkelsen up for grabs and surprise, they were both selected using territorial picks!

Wilt Chamberlain was selected by the Philadelphia Warriors using the territorial pick rule. Of course, he went to school in Kansas, which missed the 50 mile rule by about 1300 miles. The Warriors argued that there was no team in Kansas and that Wilt went to high school in Philadelphia. The league bought it.

Bird Rights allow teams to re-sign players, even if it put the team over the cap. This was originally done so the Celtics could re-sign Larry Bird. Shocker.

In 1994, Glenn Robinson, the first pick of the draft, held out on his rookie contract. He eventually signed a 10 year, $68 million dollar deal. The next season the NBA instituted rookie scale contracts that limited both the amount and length of contracts that rookies could receive.

In 1998 Kevin Garnett signed a six year, $126 million dollar deal. In the lockout, which happened the very next season, the NBA owners changed the rules such that individual player salaries were capped.

In 2011, LeBron James and Chris Bosh chose to sign six year deals with the Miami Heat instead of re-signing with their respective teams. Both of these deals were facilitated via sign and trades — where the player’s old team signs the player to a new contract and immediately trades them away. The following season the NBA instituted rules that stated players could not get the same raise levels or contract lengths via sign and trades.

In all of these cases, we see owners changing the rules either to get a good player or in response to a deal that greatly benefited the player. The motive seems pretty clear. Owners want good players and feel upset when they have to overpay them or worse, lose out on them. And in all of the cases, the rules change in the owners favor. And the only way this works is if the owners have a good line to sell their story with. The popular stories are that the league needs to help out bad/poor teams or the league will fail. Or that the league needs to help out a particular fanbase. Or that if the players keep negotiating this way, the league will go bankrupt. And if Bell has taught us anything, it’s that a good story — even one proven false by decades of data — will work for a very long time. So we shouldn’t expect owners to stop this trick any time soon.

-Dre

P.S.: Interestingly, Stan Kostka only played 9 games in the NFL and his stats were nothing spectacular. So, over the loss of roughly $80,000 of today’s dollars and a player that never really helped, we’ve had both the parity myth and the draft for almost eighty years!

‘Democracy is two wolves and a sheep voting on what’s for dinner.’
A lot of this discussion dovetails nicely with the Ed O’Bannon law suit and the suggestion that Andrew Wiggins play in Europe for a year.

> In all of these cases, we see owners changing the rules either to get a good player or in
> response to a deal that greatly benefited the player.

Maybe there are some particulars that I’m unfamiliar with, but it seems like salary cap exemptions like ‘Bird Rights’ are, in principle, favorable to players at the expense of the owners, since more salary cap space means more player income.

I think the parity myth does not apply to all sports equally. The NFL has strict salary cap rules and an extremely strong draft that allows a great deal of parity. Of course the MLB has very few rules and has created a system with a large divide between the rich and poor. I believe that owners are acting in self interest, but parity may be a factor in these interests.

Financially, OKC didn’t need to pay Harden because with or without him, they remain a title contender (thanks to two of the top-10 players of the league : Durant & Westbrook) and their primary income (season tix, suites, partners) remains the same.

Sportingly, a team with Durant, Westbrook & Harden is more likely to win a title than a team with “only” Durant & Westbrook.

So you’re trying to tell me that OKC didn’t want a title? That’s laughable. The truth is that OKC thought that they could win a title without Harden, and since nothing is ever guaranteed, they decided to trade him away (even though that was stupid, as it wouldn’t have cost them anything to keep Harden for one more year on his rookie scale contract).

NBA teams always want to win a title (even the Clippers). The question is merely to what degree.

Here is a quote discussing revenue sharing:
“Whenever you have 30 teams in 30 different markets, you have 30 different goals and needs,” said one team executive, addressing the sensitivity of the issue (revenue sharing) among owners. “It’s not perfect, but I think it will show that it will be a success.”

I don’t like defending rich people that much, but I think Bell kinda/sorta had a legitimate case here. Eight NFL teams folded in the 1930′s: Frankford (PA), Minneapolis, Newark, Providence, Staten Island, Cincinnati, Cleveland, and St. Louis, all of them before the institution of the draft. Four more: Brooklyn, Boston, Baltimore, and Dallas, would fold from 1940-1952. Bidding wars drive up salaries, and high salaries can be unsustainable for a fledgling league. Cincinnati, Cleveland, and St. Louis were are are not small markets. The shady part comes with the subsequent changes, although I am fine with the Larry Bird Exception. I am all for a free market and releg/promo, but the owners are too greedy. Honestly, I wish the players and the more…enlightened owners would reform the NBA.

if you take away the ability for BIRD RIGHTS to be tradeable then this solves 90% of the problem. I mean look at the lakers, they had enough talent to win but they have this talent because of allowing bird rights to be traded.but then again, this does nothing to quell the big 9…. chicago would still be good, Miami would still be good and San antonio would still be good… back to the drawing board for me then

I agree with the sentiment of the article. Intuitively (i.e. I can’t prove it ;) ) I’d add that some kind of perceived competitiveness is a catalyst for business.

If it’s a foregone conclusion that one team will always win it all, then it’s just not that tempting to watch them after the initial awe fades (think Harlem Globetrotters, while still effective as a team you couldn’t have them play as a franchise in one place against the Generals, and even they won at least twice ;) )

Of course you could also argue that there is this inherent perception of chance in sports that allows viewers to invest in the David figure since victories over Goliath are that much more rewarding emotionally.

I think parity works in the NFL because that league has built its appeal around teams, while the NBA builds its appeal around superstar players. I always ask friends why it is that Green Bay can win the SuperBowl but people think its ludicrous that Milwaukee would win the NBA title. They can never answer that. Even though the Cowboys are the “Yankees of football” in terms of fan appeal and whatnot, the NFL does not allow them to convert that into dominance of the league. This is part of the reason why the NFL eats the NBA’s lunch.

” I always ask friends why it is that Green Bay can win the SuperBowl but people think its ludicrous that Milwaukee would win the NBA title” –It is “ludicrous” because of Milwaukee’s management over the last 25 years.

[...] this conditioning, bravely relinquish your priors for a notation and cruise a probability that a league can be successful though parity. Or that, according to a paper The Economics of Sports Leagues by economist John Vrooman, [...]

“We need a fair league where any team has a shot of winning! If the same teams just keep winning over and over, no one will watch!”

Is not the point, rather than “if a league is unbalanced, no-one will watch”, “if a league is more competitive, more people will watch”? The NBA, MLB etc are very successful and popular… if they were more competitive, might they not be even more successful and popular?

> The NBA, MLB etc are very successful and popular… if they were more competitive, might they not be even
> more successful and popular?

I haven’t done any formal analysis, but I expect that the leagues will – in total – do better if the large market teams win more than the small market teams because a win for a large market team plus a loss for a small market team translates to a net increase in fan activity.

This leads to a funny situation where the same people who argue for the salary cap by claiming they want the league to be competitive may also be utilizing shady tactics to get big market teams into the playoffs.

Re “I haven’t done any formal analysis, but I expect that the leagues will – in total – do better if the large market teams win more than the small market teams because a win for a large market team plus a loss for a small market team translates to a net increase in fan activity.”

Hi Nate, I suspect you may be quite right about the fan activity.

A potential counterpoint is that not all of those watching game broadcasts identify themselves as fans of either competing team (especially those who regularly watch several broadcast games in a weekend or throughout a week). A league which thinks entirely in terms of the “local” markets in which franchises perform is excluding a potentially huge market – the whole rest of the world. These non-parochial followers may have a preference for seeing as many close games as possible, and therefore be more attracted to a highly competitive league.

I’m still in the early stages of my research into the Australian Football League – coincidentally, just as the CEO in visiting your shores to discuss – what else? – competition equalisation: